Comments on: When Consumers Get Depressed

By: Jesse

Jesse — Fri, 26 Dec 2008 08:21:07 +0000

My point is, putting all academic discussion aside (which I believe is dangerous), this is a US experiment. This is economic terrorism in its perfect manifestation…. Simon has repeated that all US debt is in US dollars. All plans for US (GLOBAL) growth depend on US stimulus (infrastructure, tax cuts (middle income), printing cash, healthcare). If we control the value of money then there is no surprise. If a gallon of milk costs $1 this week and $1.50 next year I can deal. I will still buy the gallon of milk. If a tv, or toaster, microwave, car, grill, glassware, spoon, xbox, dvd player, mp3 player, computer, etc, etc, etc…. cost more than it is today and I make less money OR am worried about my job, I won’t buy it. I will not buy any of them. The hope is the rest of the world wants their first dvd player, mp3 player, etc, etc. This will support the demand that has lived for so long. If not then the world we know is over.

I HATE this argument but this is a perfect example of US hegemony. We own (sold) this crisis (cycle). It wouldn’t exist without US ingenuity!
So….. what happens now?
As a country we need to regain international trust. If it wasn’t for our military would there be an argument as to whether we deserve it?

What was the external investment in Japan like after their crisis?

By: Steve

Steve — Sat, 20 Dec 2008 10:36:43 +0000

Jesse:

get ready for a big surprise!

the USD…..

By: Jesse

Jesse — Sat, 20 Dec 2008 08:23:59 +0000

Brilliant! So we are in a cycle that is completely manufactured with a govt subsidy that is being forced down our throats due to a perceived threat? How can this be seen as a bad thing for the US? We will save our money, the rest of the world will spend to move up to our living standard, BUT will be capped by the US GDP. In essence we control the global growth going forward. We (with support by other countries) have been able to sell failed investments that have set our competitors back (Venezuela, Russia, Iran, etc) while centralizing our power ( US DOLLAR).
Am I wrong in saying that in any model played out right now nobody benefits more than the USA?

By: Tom K

Tom K — Sat, 20 Dec 2008 05:36:31 +0000

The tendency for “synchronized savings” (everybody deciding to become a saver rather than a consumer) in troubled economic times certainly does not help. Yet, I am sure there are many consumers and many large and small businesses which would be only too happy now to accept credit at reasonable terms, if it were available. The lack of credit is still a very big part of this economic downturn.

There was an interesting article in the New York Times, “Japan Offers a Possible Roadmap for U.S. Economy”, which describes how Japanese officials in the early part of this decade managed to get banks to provide credit at a time when Japanese credit was tight. Even though the central bank had brought its short term interest rate to zero, this alone was not enough to get the banks to lend.

The article describes the actions which turned the tide:

“In Japan’s case, economists and former bankers say, credit began to flow freely again only after 2003, when regulators adopted a tough new policy of auditing banks and forcing weaker ones to raise new capital or accept a government takeover. Economists said the audits finally removed paralysis in credit markets by convincing bankers and investors that sudden failures were no longer a risk, and that the true extent of problems at banks and other companies was finally being revealed.

Economists say Washington needs to do something similar to make banks and financial companies more transparent, and reassure investors that there were no more collapses like that of Lehman Brothers on the horizon.”

The URL for the article is http://www.nytimes.com/2008/12/20/business/worldbusiness/20yen.html?ref=business.

Many in Congress appear to be angry that banks are not lending despite the large liquidity injections from TARP. In crafting future investments in the financial sector, they might want to take a close look at what the Japanese did just a few years ago.